Topic of the week

There were two great posts about valuations this week. In Beware the Post-Money Trap, our own Albert Wegner describes the potential trap of a high valuation, which can weigh on founders of early-stage companies. Benchmark's Bill Gurley posted about how late-stage companies and investors are forgoing the kind of scrutiny that comes with an IPO.

Embedded within Albert and Bill's posts are some interesting cultural and psychological factors surrounding fundraising. For example, many founders often feel that valuations are a barometer for success. This can often be a good thing, as competition is one of the great motivators. But there are obvious downsides: If Company A raises at a higher valuation than Company B, then the founders of Company B wonder why they didn’t get a higher valuation (even if it was perfectly appropriate). And when market averages start to approach round numbers — $10mm, $100mm — they tend to serve as artificial benchmarks for what one should raise.

Albert’s post also highlights how founder, employee and investor psychology make a down round so difficult, but one can imagine a different environment in which down rounds didn’t carry such baggage.

We’d love to hear from you about some of the other psychological and cultural dynamics surrounding fundraising. What are the most central factors and effects? What can be done to ensure a healthy, robust fundraising environment in the future?

What are the most central factors and effects for founders, investors, and employees?

What can be done to ensure a healthy, robust fundraising environment in the future?

There were two great posts about valuations this week. In Beware the Post-Money Trap, our own Albert Wegner describes the potential trap of a high valuation, which can weigh on founders of early-stage companies. Benchmark's Bill Gurley posted about how late-stage... ↓ expand

Yesterday the NASDAQ ($QQQ) hit 5000. Hasn’t been here in 15 years. My friend Brian Lund had a nice write up about the differences between 2000 and 2015. The tech market hitting highs made me think about the other end of the market. The end where the company is just starting out

Yesterday the NASDAQ ($QQQ) hit 5000. Hasn’t been here in 15 years. My friend Brian Lund had a nice write up about the differences between 2000 and 2015. The tech market hitting highs made me think about the other end of the market. The end where the company is just starting... ↓ expand

Yesterday the NASDAQ ($QQQ) hit 5000. Hasn’t been here in 15 years. My friend Brian Lund had a nice write up about the differences between 2000 and 2015. The tech market hitting highs made me think about the other end of the market. The end where the company is just starting out

We are launching a topic-based messenger, Trigger. Explore interesting content and discuss with your friends. The app lets you trigger multiple topic-based DMs making conversations more elegant. It also has a Reddit-like flow but for messaging.

We are launching a topic-based messenger, Trigger. Explore interesting content and discuss with your friends. The app lets you trigger multiple topic-based DMs making conversations more elegant. It also has a Reddit-like flow but for messaging.

We are launching a topic-based messenger, Trigger. Explore interesting content and discuss with your friends. The app lets you trigger multiple topic-based DMs making conversations more elegant. It also has a Reddit-like flow but for messaging.

"To put the above more plainly, any instance of a blockchain and its underlying tokens are inextricably bound together. The token provides the fuel for the blockchain to operate, and the blockchain provides consensus on who owns which tokens. No amount of engineering can separate them."

real talk:
"To put the above more plainly, any instance of a blockchain and its underlying tokens are inextricably bound together. The token provides the fuel for the blockchain to operate, and the blockchain provides consensus on who owns which tokens. No amount of engineering... ↓ expand

real talk:

"To put the above more plainly, any instance of a blockchain and its underlying tokens are inextricably bound together. The token provides the fuel for the blockchain to operate, and the blockchain provides consensus on who owns which tokens. No amount of engineering can separate them."

But the most interesting thing here is in its standalone forums, which represent the first time Disqus has hosted discussions away from its core widget. The first two forums are for fashion and movies; you can join any of the discussions there or create your own. It feels a bit like Reddit if it was made by people obsessed with comments

But the most interesting thing here is in its standalone forums, which represent the first time Disqus has hosted discussions away from its core widget. The first two forums are for fashion and movies; you can join any of the discussions there or create your own. It feels a bit... ↓ expand

But the most interesting thing here is in its standalone forums, which represent the first time Disqus has hosted discussions away from its core widget. The first two forums are for fashion and movies; you can join any of the discussions there or create your own. It feels a bit like Reddit if it was made by people obsessed with comments

I wrote a piece on Net Neutrality. I think it's a mistake for everyone to be celebrating the FCC rules. It could be a super successful, but at the same time government regulation doesn't always work out as intended. It's a tough topic. I doubt this decision will be end of the discussion.

I wrote a piece on Net Neutrality. I think it's a mistake for everyone to be celebrating the FCC rules. It could be a super successful, but at the same time government regulation doesn't always work out as intended. It's a tough topic. I doubt this decision will be end of the... ↓ expand

I wrote a piece on Net Neutrality. I think it's a mistake for everyone to be celebrating the FCC rules. It could be a super successful, but at the same time government regulation doesn't always work out as intended. It's a tough topic. I doubt this decision will be end of the discussion.

They raised relatively little so probably had supply / demand on their side – which drove competition and enabled a higher price.

VCs are currently living in FOMO land so they’ll overpay for aspirational value in the future if they see growth.

There’s a lot of inefficiencies at these price levels.

A “good price” is when you have a willing buyer and a willing seller, both happy, and willing to work together on whatever path you are on!

Each of these examples got me thinking about the relative valuation trap.

My response to the specific situation was:
Valuations have increased on a relative basis.
They raised relatively little so probably had supply / demand on their side – which drove competition and enabled a higher price.
VCs are currently living in FOMO land so they’ll overpay... ↓ expand

My response to the specific situation was:

Valuations have increased on a relative basis.

They raised relatively little so probably had supply / demand on their side – which drove competition and enabled a higher price.

VCs are currently living in FOMO land so they’ll overpay for aspirational value in the future if they see growth.

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